The “our” in this case refers to ExxonMobil. Often considered the face of “Big Oil,” the company is the largest intact remnant of John D. Rockefeller’s Standard Oil empire and the world’s largest US-based oil company in terms of reserves, production and revenue.
Love or hate them, Exxon is a well-run company with strict investment criteria and high operational standards. Exxon is also known for being a “Private Empire,” – as detailed in Steve Coll’s book – that acts in its shareholders’ best interests as a supranational entity that remains generally tight-lipped in dealings with the press and public. That’s what makes the release of 2 reports on the firm’s climate change mitigation strategies so interesting. In this case, it was the shareholders themselves who drove ExxonMobil to action.
Given the near ubiquity of pension fund and 401K investment in Exxon’s stock, many people’s future income is tied into the company’s long-term performance. With increasing concern about climate change impacts, shareholder organizations have been reevaluating their members’ corporate fossil fuel investments, with increasing apprehension over the idea that in a carbon-constrained world these firms may not be able to produce – and profit from – fossil fuel reserves thus rendering them “stranded assets.”
Institutional investors are not yet pulling the plug on fossil-based energy company holdings, but they are asking questions – Exxon is not the only company responding to shareholder resolutions – and getting answers from giant multinational firms not accustomed to publicly addressing the issue in such detail.
“Based on this analysis, we are confident that none of our hydrocarbon reserves are now or will become “stranded.” We believe producing these assets is essential to meeting growing energy demand worldwide, and in preventing consumers – especially those in the least developed and most vulnerable economies – from themselves becoming stranded in the global pursuit of higher living standards and greater economic opportunity.” ExxonMobil, Energy and Carbon — Managing the Risks
Extreme climate fundamentalists argue fossil fuel production should immediately cease and if that means global transport grinds to a halt, thousands of companies go bankrupt and millions endure comparatively short-term suffering, that price must be paid to save the planet. On the other end of the spectrum, some are arguing climate change is good for humanity and should be embraced.
As with most issues, there is a large middle ground seeking to address climate change impacts by weighing and mitigating myriad associated risks. Exxon probably falls somewhere within this zone.
Far from over, the debate is ratcheting up with the just-released UN IPCC report and several important upcoming UN Framework Convention on Climate Change meetings in Germany, Peru and France. ExxonMobil’s contribution to the conversation – sparked by its shareholders – is important because it represents a shift from the status quo and it will be interesting to monitor the corporate response to climate change going forward.